The Software Developer Shortage and What We Can Do About It

In recent years, an ongoing software developer shortage has stalled new projects despite increased demand. Companies starting or already in the development process need to know the factors contributing to this scarcity of talented developers and how they can succeed despite the current tech industry environment.
The Software Developer Shortage and What We Can Do About It.

The developer talent shortage is not a myth

The developer talent gap in the tech industry is very real. This global shortage is caused by many factors, including the increasing complexity of custom software engineering and growing demand and competition for skilled developers.

The US Department of Labor reports that there are over 1.6 million developers, quality assurance analysts, and testers employed in the US. That employment is expected to grow by 25% to over 2 million by 2031, much faster than the average for all occupations.

Despite this rapid growth, there is an insufficient number of professional developers with the right tech skills to meet the needs of the job market. As of 2021, the tech talent shortage amounted to 40 million qualified developers and engineers worldwide, expected to reach 85.2 million by 2030.

The implications of a developer shortage

A developer shortage can have many implications for the software development industry.

First, it can lead to an increase in the cost of software development projects as companies compete for a limited number of qualified developers. It’s projected that little more than a quarter of current talent candidates fully meet employment requirements. The mismatch between employer requirements and available technical talent results in diminishing quality of products and services.

Significant delays in the development of new software projects can affect larger economies. As companies in the US struggle to find the necessary talent, other nations are better able to compete as a global leader in tech and innovation. It’s estimated that the US could miss out on over $162 billion in annual revenue unless it fills more tech roles.

Finally, the shortage can also lead to a brain drain. Current tech workers can leave for different jobs where the demand for their skills is not as taxing. Global consultancy McKinsey & Company reported that in 2022, 40% of employees across industries in the US were at least somewhat likely to leave their current job. As we now look back on that year, this trend may have had drastic consequences for many companies’ internal expertise. It’s essential for organizations to monitor their employee satisfaction and retention strategies to maintain a strong workforce and safeguard their knowledge base.

5 Factors contributing to the developer shortage

Here are some of the factors that contribute to the software developer shortage:

1. The industry is growing at an unprecedented rate.

One of the main reasons for the skills gap is the growth of digital transformation, or modernization. This growth is putting a strain on the existing talent pool and making it difficult for companies to find qualified developers. When companies can’t fill vacancies, additional strain can be placed on the existing team, leading to developer burnout and turnover.

2. The complexity of software development is increasing.

As the industry moves towards more complex and advanced technologies, the skills required to develop these technologies are becoming more specialized. This is making it difficult for companies to find programmers with the right skills. The U.S. Bureau of Labor Statistics projects that the demand for software engineers, quality assurance analysts, and testers will come from the expansion of development for AI (artificial intelligence), IoT (Internet of Things), and other automation applications.

3. There is a skill mismatch between education and industry.

College degrees alone are not necessarily enough. Theoretical concepts taught at the university level are foundational but rarely meet most companies’ requirements for junior developers. Coding bootcamps can help to accommodate the skills shortage but usually are limited in scope focusing on a single programming language. Developers need professional development in addition to the technical expertise they gain through their academic careers.

4. There will always be competition for top talent.

The Great Resignation or Reshuffle accelerated the rate at which employees change jobs, but competition was always a factor. Skilled developers remain in high demand. Expanded opportunities for remote work mean that the pool of potential employers for any given job has grown. The Internet and social media allow job seekers more access and opportunities to engage with potential employers, hiring managers, and recruiters.

5. The looming recession

Despite a pending recession, tech talent is still in demand, and hiring will continue to be a challenge through 2023. With tech giants like Amazon, Meta, Twitter, and more laying off thousands of skilled workers, this could be an ideal time for startups and small businesses to hire. Freelance developers can expect an increase in available gig work as staff attrition shifts with the market.

Solutions to the software developer shortage

What other steps can be taken to ease the software developer shortage?

Better ongoing education

It’s easy to blame the computer science curriculums, but employers must also address their expectations in the hiring process. There is unequal access to computer science education throughout the US and the world. Both governmental and philanthropic support is necessary to improve the situation and nurture the next generation of software developers. This will help to ensure that there is a pipeline of qualified talent coming into the industry.

Internships and mentoring

The industry needs to develop more internship and apprenticeship programs. These programs will provide the necessary training and experience for aspiring developers. Companies should consider on-job training, ongoing education initiatives, mentorships, and paid internships to continually develop skilled workers while advancing the careers and skillsets of their current team members. At HatchWorks, we address this education gap through our HatchFutures program.

New way of working

Tech executives need to embrace remote work and the global workforce. 33% of developers are interested in teleworking full-time while another 37% are open to hybrid options. This is in close alignment with the current availability of remote roles, estimated at 33% fully remote and another 29% offering hybrid options.

The truth is that location doesn’t matter, talent does. There are skilled workers all over the globe. Limiting your talent pool to candidates within a single city or region may leave you unable to meet your business goals. Development teams are better aligned by time zone rather than cubicles.

The industry does seem to recognize this as it’s now reported that 40% of recruiters are hiring internationally for roles in other countries. Nearshore software development services in particular have allowed many companies to find the right talent and skills at a price they can afford.

Nearshore developers are often more affordable than their Onshore counterparts and can provide the same level of quality and expertise. Our guide to nearshore provides an explanation for how nearshore works and a full comparison of onshore, offshore, and nearshore costs.

Frequently Asked Questions About the Software Developer Shortage

Salaries vary depending on experience, location, and other factors. The average salary for a software engineer in the US is $101,790 per year.
There are a few ways that big tech companies attract and retain top software talent:
  • Offering competitive salaries and benefits
  • Investing in employee development
  • Creating a positive and collaborative work environment
No, there is currently a shortage of freelance developers. The demand for software developers is outpacing the supply, driving up salaries and making it difficult for companies to find talent.
There are a few ways that aspiring software developers can make themselves more attractive to employers:
  • By taking some courses or getting a certification in software engineering
  • By interning at a software engineering company
When hiring entry-level software engineers, employers typically look for candidates with a bachelor’s degree in computer science or a related field. They also look for candidates with strong problem-solving and programming skills.


The software development industry is facing a talent shortage. This shortage is caused by a number of factors, including the increasing complexity of software development, the increasing demand for new software development projects, and the limited supply of qualified software developers. Nearshore development can help to alleviate the talent shortage by providing access to a larger pool of qualified developers.

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